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Governance Changes For Firms Added To The S&P 500

Author

Listed:
  • Xin Li
  • Tih Koon Tan

Abstract

What happens to corporate governance after a firm is added to the S&P 500 index? Using firms added from 1994 to 2007, this paper examines how governance mechanisms change for these firms. Specifically, we look at both the overall governance and details on how each mechanism changes. We find that governance improves after being added to the index. Controlling for firm size, leverage, prior firm performance, and growth opportunities, the market reacts positively to governance improvements as a whole. In addition, changes in governance are positively associated with changes in operating performance

Suggested Citation

  • Xin Li & Tih Koon Tan, 2015. "Governance Changes For Firms Added To The S&P 500," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 9(4), pages 21-35.
    • Handle: RePEc:ibf:ijbfre:v:9:y:2015:i:4:p:21-35
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    References listed on IDEAS

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    Cited by:

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    4. Baran, Lindsay, 2017. "Director connectedness and firm value in S&P 500 Index reconstitutions," Journal of Economics and Business, Elsevier, vol. 92(C), pages 63-79.
    5. Harleman, Max & Weber, Jeremy G., 2017. "Natural resource ownership, financial gains, and governance: The case of unconventional gas development in the UK and the US," Energy Policy, Elsevier, vol. 111(C), pages 281-296.

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    More about this item

    Keywords

    Corporate Governance; S&P 500; Firm Performance;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other

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